## United States Court of Appeals for the Federal Circuit
05-1177, -1192 LAVA TRADING, INC, Plaintiff- Appellant,

v.
SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, and LOUIS FENG LIU, Defendants-Appellees, and ROYALBLUE GROUP PLC, ROYALBLUE FINANCIAL CORPORATION and ROYALBLUE FI NANCIAL PLC, Defendants-Appellees.

Albert L. Jacobs, Jr. , Greenberg Traurig LLP, of New York, New York, argued for plaintiff-appellant. With him on the brief were Daniel A. Ladow and Barry J. Schindler

. Robert R. Brunelli , Sheridan Ross P.C., of Denver, Colorado, argued for defendants-appellees, Sonic Trading Management, LLC, et al. With him on the brief was Scott R. Bialecki . Of counsel was Bill Vaslas , Vaslas Lepowsky Hauss & Danke LLP, of Stanten Island, New York. Claude M. Stern , Quinn Emanuel Urquhart Oliver & Hedges, LLP, of Redwood Shores, California, argued fo r defendants-appellees, Royalblue Group PLC, et al. With him on the brief was Michael B. Carlinsky and Edward J. DeFranco , of New York, New York. Appealed from: United States District Cour t for the Southern District of New York Judge Thomas P. Griesa

## United States Court of Appeals for the Federal Circuit 05-1177,-1192 LAVA TRADING, INC, Plaintiff-Appellant,

v. SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, and LOUIS FENG LIU, Defendants-Appellees, and ROYALBLUE GROUP PLC, ROYALBLUE FINANCIAL CORPORATION And ROYALBLUE FINANCIAL PLC, Defendants-Appellees.

__________________ _________ DECIDED: April 19, 2006

__________________ _________ Before MAYER, RADER, and LINN, Circuit Judges

. Opinion for the court filed by Circuit Judge RADER. Dissenti ng opinion filed by Circuit Judge MAYER. RADER, Circuit Judge

. This appeal stems from tw o stipulated judgments of non-infringement of U.S. Patent No. 6,278,982 (the ’982 patent). Lava Trading, Inc. v. Sonic Trading Mgmt., LLC , 03-CV-9382 (S.D.N.Y. Dec. 8, 2004) (Royalblue Stipulation ); Lava Trading, Inc. v. S onic Trading Mgmt., LLC , 03-CV-0842 (S.D.N.Y. Dec. 8, 2004) (Sonic Stipulation ). Because flaws in the district court’s interpretation of claim 9call the stipulated judgments int o questi on, this court vacates and remands for further proceedings.
I. Lava Trading, Inc. (Lava) owns t he ’9 82 patent, which claims software that aggregates and integrates securities tr ading and or der placement information from various alternativ e trading s ystems. ’982 patent, col. 1, ll. 7-13. Lava s ued Sonic Trading Management LLC, Joseph Cammarata and Louis Feng Liu (collectively Sonic) and Royalblue group plc , Royalb lue financial c o rporation and Royalblue financ ial plc (collectively Royalb lue) in the United St ates District Court for the Southern District of New York fo r infringement of the ’982 patent, among other state law c l aims. The defendants denied infringe ment and c o unterclaimed for a declaratory judgment that the ’982 patent is invalid, unenforceable, and not infringed. Royalblue Stipulation , slip op. at 1; Sonic Stipulation , slip op. at 1. On May 24-26, 2005, the dist rict court held a Markman hearing and issued a claim construction ruling fr om the bench. Thereafter, the parties stipulat ed to final judgments of non-infringement. See Royalblue Stipulation ; Sonic Stipulation

. Lava appeals the stipulat ed final judgment orders.
II. At the onset, the procedural posture of this appeal pres ents problems. For instance, this court notes that defendan ts’ counterclaims of invalidity and unenforcea b ility are still p end ing before the trial court. These p e nding counterclaims put this court in the awk w ard posit ion of reviewing a c l aim construction that may implicate issues and claims beyond this court’s current

05-1177,-1192 2reach. See Int’l Commc’n Materials, Inc. v. Ricoh Co. , 108 F.3d 316, 318-19 (Fed. Cir. 1997) (commenting that, when substantial issues remain open on appeal, this court should first “provi de the district j udge and parties the opportunity to complete the picture.”). In addition, this record on appeal does not supply any meaningful comparison of the ac cused products to the asserted claims . Without knowledge of the ac cused products, this cour t cannot assess the ac curacy of the infringement judgment under rev i ew and la cks a proper context for an acc u rate claim construction. “While a trial court sh ould c e rtainly not prejudge the ultimate infringement analysis by construing claims with an aim to include or exclud e an accused product or process, knowledge of that product or process provides meaningful context for the first step of the infringement analys is, claim construction.” Wils on Sporting Goods Co. v. Hillerich & Bradsby Co. , 2006 WL 722127, slip op. at 7 (F ed. Cir. 2006) (citing SRI In t’l v. Matsushita Elec. Corp. of Am. , 775 F.2d 1107, 1118 (Fed. Cir. 1985); Scripps Clinic & Res earc h Found. v. Genentech, Inc. , 927 F.2d 1565, 1580 (Fed. Cir. 1991); Multiform Dessicants, Inc. v. Medzan, Ltd. , 133 F.3d 1473, 1476-78 (Fed. Cir. 1998); Pall Corp. v. Hemasure Inc. , 181 F.3d 1305, 1308 (Fed. Cir. 1 999)). Without the vital contextual knowledge of the accused produc ts or processes, this appeal takes on the attributes of something akin t o an advis ory opinion on the scope of the ’982 patent. The problems with such an appeal, even if with i n th is cour t’s jurisdiction, have been noted in many of the court’s prior cases. See , e.g. , id. (citing Bayer

05-1177,-1192 3AG. v. Biovail Corp. , 279 F.3d 1340, 134 9 (Fed. Cir. 2002); CVI / Beta Vent ures Inc. v

. Tura LP , 112 F.3d 1146, 1160 n.7 (Fed. Cir. 1997)). Nonetheles s , the court notes that the district court issued a Rule 54(b) certification in this c a s e . See F e d. R. Civ. P. 54(b). Ru le 54(b) allo ws a district court to act as a “dispatcher” and “determi ne, in the first instance, the appropriate time when each ‘fina l decision’ u pon ‘one or more but l e ss than all’ of the claim s in a multiple claims action is ready for appeal.” Pause Tech. LLC, v. Tivo Inc. , 401 F.3d 1290, 1294 n.2 (Fed. Cir. 2005). Thus, while troubled by the pending counterclaims and the absence of a detaile d infringement analys is, this court has jurisdiction under 28 U.S.C. § 1295(a)(1) (2000).
III. Turning to infringement, the ’982 pat ent claims software that aggregates and integrates information from various syst ems for buying and s e lling sec u rities (e.g., stocks, bonds, commodities and derivatives). See ’982 paten t, col. 1, ll. 7- 13. The ’982 patent specif ically addresses a problem wherein a user with access to only a subset of these systems confro nt s substantial fluctuations in prices amongst th ese systems for a given security. Id. at col. 3, ll. 6-31. To illustrate, a buyer may not know of lower prices available on another syst em and/or a seller may not kn ow of higher prices available on another system. Embodiments of the ’982 patent solve this problem by aggregating and integrating information from these various sy stems. One embodim ent of the ’982 patent depicted in F i gure 5, for example, aggregates and int egrat es pricing data for a single security (e .g., DELL):

05-1177,-1192 4Id. at col. 9, ll. 9-25. As shown above, the screen 2 80 “provides the customer with the ability to take advant age of pric e variations in a rapidly c hanging environment.” Id. at col. 9, ll. 23-25. Thus , t he user is provided wit h considerable pricing information for a giv en securit y and, ar med with this information, can make a transaction. The patent also dis c loses other embodiments. With this backdrop, an infringement anal ysis is a two-step process: “First, the court determines the scope and meaning of the patent claims asserted . . . [and second,] the properly construed cl aims are compared to the allegedly infringin g d e vice.” Cybor Corp. , 138 F.3d at 1454 (citations omitted). “Step one, claim cons truction, is a question of law, that we review de novo. Step two,

05-1177,-1192 5comparison of the claims to the accu sed device, is a question of fact, and requires a determination that every claim limitation or its equivalent be found in the accused devic e.” N. Am. Containe r, Inc. v. Plastipak Packaging, Inc. , 415 F.3d 1335, 1344 (Fed. Cir. 2005) (citations omitted). A. Waiver/Estoppel Before this court can construe the clai ms, however, it must firs t a ddress a potential waiver/estoppel issue surrounding Lava’s c u rrent claim construction theory. The waiver/estoppel iss ue relate s to a change in Lava’s counsel d u ring proceedings before the district court. B e fore and during the district court’s Markman hearing(s), Lava’s initial counsel argued the term “distributing” s h ould be construed as “providing the consolidat e d or composite single list of open orders for a giv en sec u rity . . . to the users of the present invention” - i.e., for only

one sec u rity. Pl. Lava Trading In c.’s Opening Cla im Constr. Br. at 53, Lava Trading Inc. v. Sonic Mgmt., LLC , 03-CV-842 & 03-CV-9382 (S.D.N.Y. 2003) (emphasis in original altered). T he district court, however, rejected Lava’s proposed definition and adopted a construction requiring the dist ribution of data for all s e curities in the combined order book

. Lav a Trading, Inc. v. Sonic Trading Mgmt., LL C , 03-CV-9382 & 03-CV-0842, slip op. at 442-43 (S.D.N.Y. Dec. 8, 2004) (Claim Construction Order ). Lava then obtai ned new counsel who advanced Lava’s current cl aim cons t r uction theory in a motion for reconsider ation. Lava now interprets “distributing” as “providing to tr aders combined order book in formation . . . for one security or m o re than one sec u rity , as desired by the traders” - i.e., a subset of the combined order book.

05-1177,-1192 6Memorandum In Support Of Lava’s Motion For Reconsideration Of A Portion Of The Court’s Decis i on On Cla im Constr. at 2, Lava Tr ading, Inc. v. Sonic Trading Mgmt., LLC , 03-CV- 842 & 03- CV-9382 (S.D.N.Y . July 29, 2004) (emphasis added). The district court rejected Lav a’s motion for reconsideration wit hout comment. Lava Trading, Inc. v. Sonic Trad ing Mgmt., LLC , 03-CV-842 & 03-CV9382 (S.D.N.Y. Aug. 10, 2004). Seizing on this change in Lava’s cl aim construction theory, the defendants argue that Lava has waived its current theory and should be estopped from raising it on appeal. The defendants rely on cases in which a party presented an argument on appeal that substantially changed the scope of a prior position taken before a trial court. See , e.g. , NTP, Inc. v. Research in Motion, Ltd. , 418 F.3d 1282, 1296 (Fed. Cir. 2005) (waiver app lied because RIM attempted to add a pull technology limit ation to the claim that it did not raise bef ore t he trial court); SuperGuide Corp. v. DirecTV Enter., Inc. , 358 F.3d 870, 889 (Fed. Cir. 2004) (waiver applied bec ause SuperGuide stipul ated to construction of the term “meet” at the trial court); Finnigan Corp. v. Int’l Trade Comm’n , 180 F.3d 1354, 13 63 (Fed. Cir. 1999) (waiver applied because Fi nnigan’s petition to t he Commission did not point out the relev ance of the lack of the te rm “unstable” in c l aim 17); Sage Prods., Inc. v. Devon Indus., Inc. , 126 F.3d 1420, 1426 (Fed. Cir. 1997) (waiver applied because Sage did not pres ent its construction of “elongat ed slot ” to the trial court). Upon review, the c ourt conclud e s these cases do not govern the facts of this case.

05-1177,-1192 7At the outset, judicial estoppel does not normally apply on appeal to prevent a party from altering an unsucce ssful position before the trial court. See RF Del., Inc. v. Pacific Keyst one Tech., Inc. , 326 F.3d 1255, 1262 (Fed. Cir. 2003) (quoting Data Gen. Corp. v. Johnson , 78 F.3d 1556, 1565 ( F ed. Cir. 1996)) (“The doctrine of judicial est oppel is that where a party succe ssfully urges a particular position in a legal proceeding, it is estopped from taking a contrary position in a subsequent proceeding w here its interests have changed.”) (emphasis in original). Thus, estoppel would not bar Lava fr om departing from a claim construction theory unsuccessfully advocated before the trial court. Moreover, on the limit ed record on ap peal, this court cannot dis c ern any practical difference between Lav a ’s two th eories. In r e sponse to both theor ies, the defendants count er that t he intrinsic rec o rd limits t he claims t o a system that distributes and dis p lays information for all s e curities. Thus, the slight change in Lava’s theory has not resulted in any meaningful change in t he defendants’ position or evidenc e relied upon by the defendants at the tr ial court or on appeal. The absence of any practical differences in the case reinforces this court’s determination that Lava has not waiv ed its current theory. See Harris Cor p . v. Ericsson I n c. , 417 F

. 3d 1241, 1252 (Fed. Cir. 200 5) (waiver did not apply because t he technic a l distinction in Er ic sson’s argument did not make any practical difference in the case).

05-1177,-1192 8B. The Disputed Limitations On the merits, the parties dispute the meaning of two related limit ations in the ’982 patent, “distri buting” and “display ing” a combined order book to a trader. Independent claim 9 recites both limitations:
9. A data processing m e thod for providing trading information to traders in a security or commodity from two or more alternative trading systems, comp rising the steps of: receiving order book information fr om each participating alternativ e trading system in order book informa tion protocols native to the particular alternative trading system; converting the information to a common system order book protocol; integrating the order book information from each alternative trading system into a single order book; distributing the combined order book to the traders in the common system ord e r book protocol; and displaying said combined order book to the traders

. ’982 patent, col. 14, ll. 1-14 (emphasis a dded). The district court construed the disputed limitations during a Markman hearing without issuing a formal claim construction order. Instead, the district court stated its claim construction from the bench at the clos e of the hearing. A dist rict court retains di sc retion to rule in this manner, but in this instance the trial court’s oral recitation provides a very sparse explanation of the findings and reasoning supporting the c l aim construction. Regarding the distributing limitation, the district court concluded that it “simply means distributing the c o mbined or der book -- that means in terms of the specification the cons olidat ed or der book -- pertaining to all order s from all ECN

05-1177,-1192 9members.” Claim Construction Order at 442-43. In other words, the distributing limitation r equires the distri bution of the whole combined order book to the trader. The district court similarly construed the display i ng limitation, concluding the system mu st display t he whole c o mbined or der book for the trader. Upon rev i ew, the district court’s interpretation of the “distributing” and “displaying” limita t ions conflicts with the plain meaning of clai m 9 and excludes embodim e nts disclosed in the specification. According to its preamble, claim 9 “provid[es] trading infor m ation to traders in a security or commodity ” rather than “all” securi ties or commodities. ’982 patent , col. 14, ll. 1-2 (emphasis added). By selecting the word “a” instead of “all,” the Applicant set forth a me thod wherein the traders may request and receive inf o rmation for only a subset of the securities (i.e., one or more). See KCJ Corp. v. Kinetics Concepts, Inc. , 223 F.3d 1 351, 1356 (Fed. Cir. 2000) (the word “a” generally means “one or more” in open- ended c l aims). Thus, the language of the claim itself does not requir e the system to distribute or dis p lay the whole c o mbined or der book. Furthermore, the specification disclos es embodiments that distribute and display inf o rmation for only a subset of the combined order book. As an example, the specific ation de scribes one embodiment in which the CCS 100 collec t s orders fr om each ECN, (ECN150 an d ECN251) and electronic exchanges (NASDAQ 52), distributes a composite order book to the customers according to eac h customer’s memberships in th e ECNs and rights to use an electronic exchange. Thus customer 10 may only receive a s u bs et of the complete order book compiled by the CCS 1 0 0 corresponding to where the cu stomer 10 is permissioned.

05-1177,-1192 10’982 patent , col. 6, ll. 59-66 (emphasis added). 1 According to this embodiment the customer only rec e ives a “subset” of the combined/ complete order book f r om the system. Thus, t h is embodiment mu st also make the syst em capable of “distributing” less than the whole combined order book to the customer – i.e., a subset of the combined order book. The specification also disc loses an embod iment in which bid a n d offer prices for D e ll, a single security, ar e displayed on a market data screen: Fig. 4 depicts a typical mark et data screen 250 of the present invention. Such scree ns can be customized as to data or order to conform to the customer’s trading st yle. . . . The security under review is Dell Comput er Corp. It was elect ed by inser t ing its tick er symbol DELL in space 252. ’982 patent, col. 8, ll. 47-54. This embodi ment is further described in reference to Figure 5: FIG. 5 shows pricing data that woul d be available to a customer of the present invention. Here, space 251 has been c hecked on screen 280 and ECN information integrated into the display. Scree n 280 shows not only NASDAQ Level II data but also the full or der book for the following three ECNs : Instinet, Island and Strike. For these ECN’s, there are multiple bids and offe rs available for DELL , as opposed to just the best bid and offer. . . . Screen 280, thus, offers access to a greater amount of pricing inf o rmation (thus greater liquidity), consolidated in one dis p lay

. Thus, the entire order books of all ECN members and the ma rket makers’ bids and offers are consolidated into a single in f o rmative screen for any particular security. This additionally prov ides the customer with the ability to take advantage of price v a riat ions in a rapidly changing environment.

1 While NA SDAQ info rmation come s from a particular electronic exchange rather than an alte rnative trading system, claim 9 is an open-ended claim that encompass e s more than simply information from alternative trading systems. See U.S. Patent No. 6,278,982, col. 2, ll. 16-29, col. 14, l. 3.
05-1177,-1192 11Id. at col. 9, ll. 9-25. Hence, the s pecification discloses embodiments that distribute and display information for only a subset of the securities (e.g., one in the embodiment of Figures 4 and 5) in the combined order book. Reading the claim language and these embodiments in the spec ification, one of ordinary skill in th is art would not limit t he distributing and displaying limitations in the manner sugges t ed by the district court. See P h illips v. A W H Corp. , 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc ) (“Importantl y , the person of ordinary skill in the art is deem ed to read t he claim term not only in the cont ext of the particular claim in which the dis puted term appears, but in the context of the entire patent, inclu d ing the sp ecificati on.”). Rather, one of ordinary skill in the art would construe the distributing and di splay i ng limitations as covering an embodiment that distributes and displays information for only a subset of the combined order book. For at leas t these reasons, this court sets aside the district court’s claim construction. Because the final judgm ent orders are premised on the flawed claim cons truction, they too must be set aside. The case is remanded to the district court for further proceeding s consistent with this opinion. COSTS Each party shall bear its own costs. VACATED and REMANDED

05-1177,-1192 12

## United States Court of Appeals for the Federal Circuit

05-1177, -1192

LAVA TRADING, INC., Plaintiff-Appellant,

v. SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, and LOUIS FENG LIU, Defendant-Appellees, and ROYALBLUE GROUP PLC, ROYALBLUE FINANCIAL CORPORATION and ROYALBLUE FI NANCIAL PLC, Defendants-Appellees.
MAYER, Circuit Judge , dissenting. Because there was no final judgment from which to appeal in the district court due to the interrelatedness of the infringement claim and the unresolved unenforceability counterclaim, I would dismiss this case for lack of jurisdiction. Therefore, I dissent. The decision today is yet another exampl e of the unfortunate consequences of Markman v. Westview Instruments, Inc. , 52 F.3d 967 (Fed. Cir. 1995) (en banc), Cybor Corp. v. FAS Techs., Inc. , 138 F.3d 1448 (Fed. Cir. 1998) (en banc), and Phillips v.AWH Corp

. , 415 F.3d 1303 (Fed. Cir. 2005) (en ba nc), which cemented this court’s jurisprudence with respect to claim constructi on as being purely a matter of law subject to de novo review. Because claim construction is treated as a matter of law chimerically devoid of underlying factual det erminations, there are no “facts ” on the record to prevent parties from presenting claim c onstruction one way in the trial court and in an entirely different way in this court. By not dismissi ng this case, we issue a decision based on a n undeveloped record. We set ou rselves up to have to decide claim construction again later, which could we ll differ from the ruli ng today. Furthermore, allowance of an appea l of the trial court’s perfunctory, offhand ru ling from the bench, for all intents and purposes allows an int e rlocut ory appeal of c l aim constr ucti on, which portends chaos in
process.

05-1177,-1192 2